Published 4:00 am, Friday, March 23, 2001

2001-03-23 04:00:00 PDT Tetovo, Macedonia -- European Union officials urged the Macedonian government yesterday to exercise restraint against ethnic Albanian militants and to intensify discussions with elected Albanian politicians about political change.

In response, the government appeared to pull back from its vow to "neutralize the armed terrorists" before serious political discussions, and Macedonian forces in and around this mostly Albanian town did not begin a promised attack on the rebels, who call themselves the National Liberation Army.

But in an incident that frightened many Slavs and Albanians alike, the Macedonian police shot and killed two Albanians armed with grenades. The Albanians were stopped at a checkpoint and appeared to pull grenades when the police demanded to search the car. The police responded with automatic weapons fire, killing the two men. The grenades did not explode.

The police said they clashed with armed rebels who appeared in Gracani, a village near the Kosovo border, about 10 miles northwest of Skopje and well east of Tetovo. At least one officer was wounded and the town was sealed, with reports that the rebels might have taken control. Another officer was wounded in a grenade attack on the outskirts of Skopje, the police said.

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The EU's top diplomats -- security chief Javier Solana, foreign affairs commissioner Christopher Patten and Swedish Foreign Minister Anna Lindh -- came to Skopje yesterday to show support for the elected government, to condemn the rebels and to try to ensure that the EU's summit in Stockholm today is not overshadowed by the shelling of Albanian villages by Macedonian troops.

Having vowed to crush the rebels, the Macedonian government is facing more pressure to act from the majority Slavs. But Western diplomats believe that the ill-trained Macedonian forces cannot win any easy victory from the rebels, who can retreat to fight again, and that serious shelling of villages is likely to cause many civilian casualties that may only feed the insurrection.

They are urging Macedonian President Boris Trajkovski and the government to take Albanian grievances more seriously and move quickly to make Albanian an official language, to decentralize local government and to create more jobs in Albanian areas. And they are urging the Albanian politicians, both within the government and in the opposition, to continue to work within the democratic system.